R&D Activities and FDI in China’s Iron Ore Mining Industry

30 Pages Posted: 20 Jan 2019

See all articles by Sizhong Sun

Sizhong Sun

James Cook University

Sajid Anwar

University of the Sunshine Coast - School of Business

Date Written: January 11, 2019

Abstract

In recent years, the Chinese government has committed additional resources in promoting research and development (R&D). At the same time, China has started implementing a more targeted foreign direct investment (FDI) policy. Using firm level panel data from China’s iron ore mining industry, this paper aims to evaluate the performance differences between the firms that undertake R&D and those who do not. We also examine the role of FDI, which has not been the subject of an in-depth investigation. In addition, we use a relatively recently developed coarsened exact matching technique. We find that domestic firms in China’s iron ore mining industry that conduct R&D are on average 0.3937% more productive and their sales are 0.0253% higher. While this industry attracts less than 1% of the total FDI in China, FDI has a positive and sizable impact on both productivity and profitability of domestic firms in China’s iron ore mining industry. The results presented in this paper suggest that investment in China’s iron ore mining industry offers attractive returns to foreign investors.

Keywords: R&D spending, FDI, iron ore mining, Coarsened exact matching, China

JEL Classification: F21; O30; Q31

Suggested Citation

Sun, Sizhong and Anwar, Sajid, R&D Activities and FDI in China’s Iron Ore Mining Industry (January 11, 2019). Available at SSRN: https://ssrn.com/abstract=3314112 or http://dx.doi.org/10.2139/ssrn.3314112

Sizhong Sun

James Cook University ( email )

Sajid Anwar (Contact Author)

University of the Sunshine Coast - School of Business ( email )

90 Sippy Downs Drive
Sippy Downs, QLD 4556
Australia

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
43
Abstract Views
969
PlumX Metrics